Waiting for jobs growth

GOP senators say legislation will boost employment

WilliamL. Watts

WASHINGTON (CBS.MW) -- An energy bill, tort reform and other pending legislation may be the missing ingredients in creating thousands of new jobs, top Republican senators said Thursday.

Although the $350 billion tax cut signed into law by President Bush earlier this year was entitled the "Jobs and Growth Act of 2003," and proponents claimed it would create more than 1 million new jobs this year and next, the most closely watched employment measure shows the economy has continued to shed jobs since the recession ended in November 2001.

Senate Majority Leader Bill Frist, R-Tenn., and other members of the Senate GOP's leadership team said they remain encouraged by signs of stronger economic growth. They acknowledged that the jobs front remains unimpressive.

"America's economy is growing and the nation is enjoying accelerated economic growth." That growth, however, "has not yet translated into new jobs and job creation," Frist said as he laid out legislative goals as part of a new GOP jobs agenda.

Sen. Kay Bailey Hutchison, R-Texas, said the tax package, with its centerpiece cut in the tax rate on shareholder income from corporate dividends, was the "first step in turning around the stock market."

"Now we are focused on jobs," Hutchison said.

Republicans estimate the energy bill would create upward of 500,000 new jobs.

While the GOP leaders aren't tying the items together into a single package, they argued that all of the highlighted measures would help create hundreds of thousands of jobs.

Among the measures mentioned were action on legislation to repeal a controversial tax subsidy and replace it with a corporate tax break and international tax reforms, the energy bill still in conference with House and Senate negotiators, a homeland security funding bill and asbestos litigation reform.

The list echoes comments by President Bush, who has also described energy legislation, litigation reform and other measures as components of a jobs-creation plan.

Bush and other administration officials, when stumping for the $350 billion tax cut earlier this year, regularly cited a Council of Economic Advisers projection that estimated the plan would create 1.4 million jobs by the end of 2004.

Payrolls have fallen for seven straight months, and investors and policymakers will be looking to Friday's round of monthly employment data to see if September breaks the mold.

While the unemployment rate fell, payrolls, the more closely watched measure of the jobs market, fell by 93,000 in August. That brought the total payroll loss since January to 595,000, an unheard-of decline during an economic recovery.

Meanwhile, surveys show public confidence in Bush's handling of the economy continues to sink, dragging down his overall approval ratings. A Newsweek poll last week found that 55 percent disapproved of Bush's handling if the economy, while 37 percent approved.

The economy has picked up speed in recent months, growing 3.3 percent in the second quarter. Economists expect to see a GDP surge for the third quarter, which ended Sept. 30. The consensus GDP forecast of economists is 4.9 percent, with some talking about 6 or even 7 percent growth. Consumer spending and business investment have accelerated, fueled in part, economists say, by the tax cut.

Democrats contend that the anemic job picture shows that the tax cuts were skewed toward wealthy taxpayers while offering little boost to the economy and creating large deficits for years to come.

The 10 Democratic presidential contenders have urged some form of repeal of at least part of the Bush tax cuts. Democrats have essentially divided into two camps. One would seek to repeal or freeze tax cuts aimed at the highest income brackets. The other camp would rescind virtually all of the cuts. See archived story.

Bush has made clear he'll portray any attempt to repeal or roll back tax cuts, including those yet to take effect, as a Democratic effort to raise taxes -- setting what is likely to be a key battle line in the 2004 presidential race.

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